Tuesday, 29 October 2019

Allegiant's latest results



 Allegiant Travel Company reported the following financial results for the third quarter 2019, as well as comparisons to the prior year - "I couldn't be happier about our post-fleet transition results with our third consecutive quarter of airline margin expansion," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant.

Consolidated
Three Months Ended
September 30,
Percent
Change

Nine Months Ended
September 30,
Percent
Change
(unaudited)
2019

2018


2019

2018

Total operating revenue (millions)
$
436.5


$
393.1

11.0
%

$
1,379.9


$
1,255.3

9.9
%
Operating income (millions)
72.1


26.2

175.5


271.3


180.4

50.4

Net income (millions)
43.9


15.1

190.0


171.6


120.4

42.6

Diluted earnings per share
$
2.70


$
0.94

187.2
%

$
10.54


$
7.45

41.5
%








































Airline only
Three Months Ended
September 30,
Percent
Change

Nine Months Ended
September 30,
Percent
Change
(unaudited)
2019

2018


2019

2018

Airline operating revenue (millions)(1)
$
430.9


$
390.4

10.4
%

$
1,366.0


$
1,249.3

9.3
%
Airline operating income (millions)(1)
77.3


29.7

160.3
%

291.4


187.7

55.2
%
Airline operating margin
17.9
%

7.6
%
10.3
pts.

21.3
%

15.0
%
6.3
pts.
Airline diluted earnings per share(1)
$
3.06


$
1.15

166.1
%

$
11.85


$
7.91

49.8
%










Airline CASM ex fuel (cents)(1)
6.40


6.78

(5.6)
%

6.13


6.37

(3.8)
%

(1) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.


"I couldn't be happier about our post-fleet transition results with our third consecutive quarter of airline margin expansion," stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. "This is our 67th consecutive profitable quarter and we've nearly tripled EPS versus the same period a year ago, despite having eight fewer aircraft in the current fleet. Airline operating margin increased ten-plus points to almost 18 percent in the quarter. Even without the year-over-year benefits from lower fuel cost per gallon, our airline operating margins would have been greater than 15 percent, almost twice as high as last year.
"We have discussed a number of times previously how our model post-transition will remain intact. After three full quarters, I am comfortable stating not only is it intact, it is actually better today than with the MD-80 fleet. Our revenue per aircraft is greater, and we have the ability to fly profitably further down the off-peak curve, thereby allowing us greater fleet utilization both in our weekly cycle and in our peak months. As an example, our average daily block hour per aircraft in the past three years, 2016-2018 averaged 6.2 hours in Q3. This year we averaged 7.4 hours, a 19.4 percent increase in utilization. We are in an excellent place in the history of the company. We have spent the past three-to-four years devising our current Allegiant 2.0 plan, and we are pacing nicely in the implementation. Our team members have been a critical component in the execution of the plan. We continue to excel in operational performance, number one in overall completion reported to date for the third quarter. Our product is our people, and it keeps getting better every day.  Hats off to all who produced a tremendous quarter during a very busy summer."
Airline only third quarter 2019 results
  • Diluted earnings per share were $3.06, an increase of nearly $2.00 per share versus last year
  • 17.9 percent operating margin for the quarter and 21.3 percent year to date
  • TRASM increased 4.3 percent despite capacity growth of 5.8 percent
    • Quarter negatively impacted .5 percent due to Hurricane Dorian
  • Total fare increased 1.8 percent despite increasing aircraft utilization by 15.6 percent
  • Fixed fee flying set a quarterly record of almost $20 million in revenue contribution
  • Cobrand credit card total revenue was $2.58 per passenger during the quarter
    • Named Best Airline Co-Branded Credit Card by the USA Today 10Best Readers Choice Awards
  • Third party hotel net revenue grew 17 percent easily exceeding growth in passengers
  • Fuel gallons used increased only 3.0 percent on ASM growth of 6.7 percent
    • Increase in ASMs per gallon of 3.6 percent to 80.3
  • Airline unit cost excluding fuel decreased by 5.6 percent
    • Maintenance, continued improvement in operations, and lower airport fees were the largest drivers
Airline operational highlights
  • Departures in the third quarter were up 8.2 percent year over year despite eight fewer average number of aircraft in service
  • Improved industry leading completion despite an increase in cancellations of more than 1.5x due to weather
    • Controllable completion was 99.97 percent, up from 99.52 percent year over year
  • On time performance (A-14) for the quarter was 79.2 percent up 4.7 points year over year
    • Controllable A-14 was 88.3 percent, up 4.5 points from last year
  • Irregular operations costs - third quarter down $5.5 million or 53 percent
    • Year to date irregular operations costs were down $14 million or 53 percent
Liquidity and shareholder returns
  • Total cash and investments at September 30 were $442 million
  • Total debt declined from the second quarter to $1.4 billion
  • We have 30 unencumbered aircraft
  • $81 million available under the revolving credit facility
  • Returned $14.7 million through share repurchases in the quarter - purchased at an average of $141.64 per share
    • Currently have approximately $85 million in share repurchase authority
  • Returned $11 million in dividends in the third quarter
    • Expect to pay dividend of $0.70 per share on December 12, 2019 to shareholders of record as of November 22, 2019
Non-airline highlights
  • Non-airline businesses resulted in a combined operating loss of $5.2 million during third quarter
  • In discussion with potential buyers for Teesnap

Guidance, subject to revision





Full year 2019 guidance

Previous
Current
Fuel cost per gallon

$2.15
$2.15
Available seat miles (ASMs) / gallon

82.0 to 83.0
82.5 to 83




Interest expense (millions)

$75 to $80
$70 to $75
Tax rate

23 to 24%
23 to 24%
Share count (millions)

15.9
16.0
Earnings per share

$13.50 to $14.25
$14.25 to $14.75




System ASMs - year over year change

8 to 9%
8.5 to 8.9%
Scheduled service ASMs - year over year change

8 to 9%
8.5 to 8.9%




Depreciation expense (millions)

$155 to $160
$155 to $160
Airline operating CASM excluding fuel - year over year change

(4) to (3)%
(3.9) to (3.3)%




Airline CAPEX - full year 2019



Capital expenditures (millions)

$385 to 390
$375 to 380
Capitalized Airbus deferred heavy maintenance (millions) *

$85 to 95
$75 to 80




Sunseeker Resorts Project - 2019 **



Project spend -YTD 2019 (millions)

$17
$33
Expected full year 2019 spend (millions)

$150 to 175
$90 to 100




Sunseeker Resorts Project - Total project **



Project spend - project to date (millions)

$67
$81
Total expected project spend (millions) ***

$470
$470




Other CAPEX - full year 2019****



Capital expenditures (millions)

$15 to 20
$15 to 20

Previous guidance as of July 24, 2019
* Not included in capital expenditure total
** Total project spend includes $25m of pre-operating expense
*** Of the total remaining capex, expect to receive $175m in third party financing from an affiliate of TPG Sixth Street Partners as the last funds in the project, of which 2/3 will be non-recourse to Allegiant Travel Company
**** Includes Allegiant Nonstop

Aircraft fleet plan by end of period












Aircraft - (seats per AC)
YE18

1Q19

2Q19

3Q19

YE19
A319 (156 seats)
32

37

37

37

38
A320 (177/186 seats)
44

47

49

52

55
Total
76

84

86

89

93

Aircraft listed in table above include only in-service aircraft and future aircraft under contract (subject to change)










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